Overview of Professional Property Management

Question 1

What is property management?

Answer 1

the direction and supervision of an interest in a landed property with the aim of securing the optimum return.

Question 2

Can return be something that is not financial?

Answer 2

YES

Question 3

What can return be?

Answer 3

• economic or social need
• prestige or political power
• continuity

Question 4

What does it mean by economic or social need?

Answer 4

• each and every property has an economic function or use
• for example: ownership of a house for occupation or ownership of a shop to operate a business

Question 5

how does prestige/political power relate to property management?

Answer 5

• big organizations like MNCs wanna be located in prestigious buildings

Question 6

What does continuity mean in property management?

Answer 6

• linked with social prestige is the wish of many property owners to safeguard the continuity of their properties
• for example private property owners would want to pass down property to the descendants and companies are anxious to maintain management and control of their properties

Question 7

Classifications of property ownerships

Answer 7

• Single-ownership
• Strata-titled (multiple-ownership)
• Real estate investment trusts (REITs)

Question 8

Types of Property Management Services

Answer 8

• Financial records
• Rent Collection and Lease Negotiation Process
• Physical Asset
• Financial Asset

Question 9

What does managing financial records mean?

Answer 9

• perform necessary financial accounting functions that are required for the property
• includes generation of a owner’s income and operating expense statement on both a monthly and yearly basis

Question 10

Managing Rent Collection and Lease Negotiation Processes

Answer 10

• property manager can also provide rent-collection &
  lease-negotiation services
• provide a procedure by which late rents could be collected
• initiate & negotiate leases
• know legal obligations and responsibilities of both tenant and owner

Question 11

Managing the Physcial Asset in Property Management

Answer 11

• establish as adequate and well-defined maintenance program
• make physical inspections to see what needs repairs
• supervise ppl responsible for maintenance activities
• possess knowledge of physical asset & concept of obsolescence

Question 12

Managing financial asset

Answer 12

• analyze variable influencing owner’s decision
• determine market rent and establish contract rents at lease signing
• advise on operating expenses
• advise on property tax, income tax etc
• advise on refinancing for investor objectives

Question 13

Role of a Property Manager

Answer 13

• interpretation and implementation of the owner’s policies
• give advice on probable effects of alternative courses of action
• day-to-day operations & economic performance of property
• minimize operating costs & maximize productivity
• supervision & evaluation of staff who work in and on the property

Question 14

What is a management contract?

Answer 14

• an agency contract whereby the property manager works for or represents the property owner
• should formalize the rights and obligations of the manager.

Question 15

What should be in an agency contract?

Answer 15

• Names of contracting parties, defining manager as agent of owner
• Term of contract
• Description of property
• Manager’s compensation, may be based on percentage of gross rent
• Duties of managers
• indemnity clause

Question 16

what does indemnity clause do?

Answer 16

• limit liability of manager in event of law suits or employee injuries
• owner should agree to carry insurance over these risks

Question 17

Challenges faced by property managers

Answer 17

• everchanging social and technological climate